you need to add them in the email message as CID's/linked resources.
here is some code I have used before which works nicely. I hope this gives you some guidance:
Create an AlternateView:
AlternateView av = AlternateView.CreateAlternateViewFromString(body, null, isHTML ? System.Net.Mime.MediaTypeNames.Text.Html : System.Net.Mime.MediaTypeNames.Text.Plain)
Create a Linked Resource:
LinkedResource logo = new LinkedResource("SomeRandomValue", System.Net.Mime.MediaTypeNames.Image.Jpeg);
logo.ContentId = currentLinkedResource.Key;
logo.ContentType = new System.Net.Mime.ContentType("image/jpg");
// add it to the alternative view
av.LinkedResources.Add(logo);
// finally, add the alternative view to the message:
msg.AlternateView.Add(av);
here is some documentation to help you with what the AlternativeView and LinkedResources are and how it works:
http://msdn.microsoft.com/en-us/library/system.net.mail.mailmessage.alternateviews(v=vs.110).aspx
http://msdn.microsoft.com/en-us/library/system.net.mail.linkedresource(v=vs.110).aspx
http://msdn.microsoft.com/en-us/library/ms144669(v=vs.110).aspx
in the HTML itself, you need to do something like the following:
"<img style="width: 157px; height: 60px;" alt="blah blah" title="my title here" src="cid:{0}" />";
notice the CID followed by a string format {0} - I then use this to replace it with a random value.
UPDATE
To go back and comment on the posters comments... here is the working solution for the poster:
string body = "blah blah blah... body goes here with the image tag: <img src="cid:companyLogo" width="104" height="27" />";
byte[] reader = File.ReadAllBytes("E:\TestImage.jpg");
MemoryStream image1 = new MemoryStream(reader);
AlternateView av = AlternateView.CreateAlternateViewFromString(body, null, System.Net.Mime.MediaTypeNames.Text.Html);
LinkedResource headerImage = new LinkedResource(image1, System.Net.Mime.MediaTypeNames.Image.Jpeg);
headerImage.ContentId = "companyLogo";
headerImage.ContentType = new ContentType("image/jpg");
av.LinkedResources.Add(headerImage);
System.Net.Mail.MailMessage message = new System.Net.Mail.MailMessage();
message.AlternateViews.Add(av);
message.To.Add(emailTo);
message.Subject = " Your order is being processed...";
message.From = new System.Net.Mail.MailAddress("[email protected]");
ContentType mimeType = new System.Net.Mime.ContentType("text/html");
AlternateView alternate = AlternateView.CreateAlternateViewFromString(body, mimeType);
message.AlternateViews.Add(alternate);
// then send message!
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